Way back 1912, when Hiram Johnson founded the Progressive Party, the jewel of their platform was initiative and referendum, most prominently implemented in California, allowing a sufficient number of voters to unite and write propositions directly onto the ballot. This populist triumph was supposed to be all about "good government," but it wasn't.
It was all about money.
In the last thirty years, the three most significant California ballot initiatives produced Proposition 13, which froze property taxes and turned one of the best school systems in the United States into one of the worst, energy deregulation, which promised lower electric bills and cost Californians over $1000 apiece almost immediately in the wake of a feeding frenzy that made Enron famous, and the recall of Governor Gray Davis, which would have put a celebrity muscle-man in the California Governor's Mansion, if that venerable old house hadn't been too small for Arnold Schwarzenegger, and it was still all about money, because the horrible offense that induced the people of California to throw Gray Davis out of the governorship was a restoration of the $300 driver's license tax that had been "temporarily" suspended in a flood of dotcom state revenues.
So California has crumbling roads and bridges, and miserably overcrowded schools, and it's probably fair to say that ballot initiatives didn't work out exactly like Hiram Johnson planned, but it never hurt his popularity: He was once re-elected to the Senate with 94.5% of the popular vote.
In defense of California referenda, no one can deny that they produce a rate of return on investment that no other enterprise can match. It only cost the energy companies around $20 million in advertising to deregulate the energy market, and that referendum repaid them over $30 billion in the first few years.
Most investors would probably agree that there's something supernatural about a return of $1500 for every $1 invested, and this mysterious profitability restores a little truth to the old Roman adage...
Vox populi vox dei.
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